GM's Opel, Ford of Europe to run European plants more efficiently

General Motors Co.’s German subsidiary Adam Opel and Ford of Europe will boost the capacity utilization rates of their European plants to lower the production costs per vehicle and return to profit in the next two years.

Opel is also closing its Bochum plant in Germany and expects then to have the second-highest capacity utilization rate in Europe after Volkswagen, supplanting Ford of Europe. But Ford announced this week that it would build the next Fiesta in Koeln after concluding a $400 million cost-saving arrangement with the plant’s works council. Along with the previously announced closure of the Genk plant in Belgium, the move will push Ford’s capacity utilization rate in Europe above 80%.

Last year, during a slump in Australian car sales Opel announced that it would stop operating as an independent brand there. But it plans to export Holden-badged cars such as the performance OPC version of the Insignia and the GTC and VXR sporty Astra versions built in Europe to Australia and New Zealand starting next year. Opel will also withdraw from the Chinese market, where its sales last year numbered fewer than 5,000, while its slightly smaller American sister brand Buick sold more than 800,000 vehicles.

On balance, however, Opel has been a beneficiary of GM’s post-bankruptcy brand strategy, which has pulled Chevrolet out of western Europe, where the two brands weren’t meant to compete but were cannibalizing each other.

Opel’s announcement a month ago that it would invest 245 million euros in its Ruesselsheim plant near Frankfurt to build two new vehicles, including one that would be sold in the U.S. as a Buick. That would boost Opel’s capacity utilization rate — but the carmaker won’t disclose to what — and its profitability. Europe has been a sinkhole for GM, which has lost $18 billion in the region since 1999. GM Europe aims to break even at mid-decade. Ford expects to return to refit in Europe next year.

Advertisement

ForbesForbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.